Philosopher, Political Scientist, Economist (1723–1790)
Adam Smith, probably the most famous economist in history, was a pioneer of political economy and wrote what is considered to be the ‘bible of capitalism’ (The Wealth of Nations). He is also credited as being the father of modern day economics.
Before the Wealth of Nations was published in 1776, the dominant idea was that a country’s wealth should be measured by its stock of gold and silver. However, Smith suggested a different measure; the total amount of its production and commerce, otherwise know as gross domestic product (GDP).
Smith also developed his theory of the division of labour as he argued that specialization would increase productivity.
At the start of the Industrial Revolution, modern day capitalism was taking form, and Smith fully supported it. He asserted that free market capitalist economies are the most productive and beneficial for society. In particular, he contended that an economic system based on individual self-interest and guided by the “invisible hand” would achieve the greatest good for all of its citizens. Every individual strives to become wealthy, for his own self-interest, and, in doing so, must exchange what he produces with others who sufficiently value what he has to offer; thus, through the mechanisms of the division of labour and free markets, society’s interest is advanced.
Adam Smith has had a far-reaching influence on pretty much every economist since himself. Whether you agree or disagree with him, no one can deny that his ideas opened up infinite debates in economics since he put them forward. Adam Smith’s free market economic theories are destined to be developed and updated time and time again in different guises for all of eternity.
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”
– Adam Smith